Beachhead - What Is the Value of Software?

As someone who has spent a fair amount of time on or around the sea, I
always enjoy looking at boats and ships—and comparing them with canned
corn.

Canned corn is a commodity. Although we may appreciate what
companies go through to select the corn, clean it, can it and move it to
store shelves, for the most part, one can of corn is exactly like
another can of corn. No consumers spend too much time standing in front
of the canned corn shelves at their store, wondering whether a
particular brand would be better for their family than
another one. They select a can and move on. As I said, canned corn is a
commodity.

This is not the case with boats. Although most people would expect any given boat to float,
different designs of boats meet different needs. There are sailboats, power boats, tugboats, and different models of each of
these types. Each model of boat has a slightly different design based on
the needs of the captain, crew and business.

Just as most people would not spend hours in front of a shelf deciding
on which can of corn to buy, most people would not run down to the yacht
broker, throw a suitcase of money on the dock and say that they would
take any boat the broker had in stock.

And, although the total cost of ownership of the boat must be taken into
consideration, the real determining factor in buying a boat
is whether it meets your needs, the pay-back period on
the purchase, and whether you could modify the boat to meet
future desires.

In other words, the boat is not a commodity.

These days, you hear a lot about the operating system being a
“commodity”, or that “no one cares about the operating
system”. I believe
that this broad generalization, like a lot of broad generalizations,
fails under many circumstances. Let's see where this particular
generalization runs aground.

A bank in Brazil had automatic teller machines (ATMs). The operating
system that it used in these ATMs was OS/2. The company that made
OS/2 was “retiring” OS/2, and the bank would no longer be able to get
the support it needed for new motherboards, device drivers and so forth.
The ATMs used Intel 386, 486 and low-end
Pentiums as CPUs, with varying amounts of main memory, disk sizes and
other differences, reflecting a long time line of development and
deployment.

The bank decided to use Linux as its new operating system, because it
supported all the different CPUs, and the bank would be able to
maintain it or expand on it into the far future. Here, the
value of the operating system was in its potential longevity.

A lottery system, also in Brazil, decided to use Linux and free and
open-source software inside the lottery terminals. It was replacing
software from a proprietary vendor who had taken months to deploy requested
changes to the lottery system. With a local development team, these
deployment schedules dropped from months to weeks. This generated
millions of dollars of additional revenue, as the new features could
be delivered faster. The value here was the speed in making changes.

A public transportation authority was spending millions of dollars a
year on proprietary software that was used only to write letters, do
presentations and run simple spreadsheets. By moving to OpenOffice.org,
the authority was able to save those millions of dollars and spend that money
on hiring new cleaners for the transportation system. The manager of
the transportation authority said that nobody cared which software
was used to type the letters, but that everyone mentioned how the
transportation vehicles were being kept very clean. The value was in
re-deploying the money that would have been spent on royalties to
services people desired.

A company in Rio de Janeiro needed a system that would work in
Portuguese, but the software it could buy was only available in
English. A free software developer duplicated the functionality of the
English-only software using MySQL, Python, FreeGIS software, Gnuplot and
other free and open-source software. The combined software was designed
to prompt and report in Portuguese, and it cost less to develop than the
packaged system. The value was having software in the company's own
language and creating a local programming job.

So, you see that the value of the software, as with a boat, cannot be
measured by the cost of building it, but by how well it meets the needs
of the user. And, although I have seen many, many families that can eat the
same can of corn, I have never, even one time, seen exactly the same
business problem.

Jon “maddog” Hall is the Executive Director of Linux
International
(www.li.org), a nonprofit association of end users
who wish to support and promote the Linux operating system. During his
career in commercial computing, which started in 1969, Mr Hall has been
a programmer, systems designer, systems administrator, product manager,
technical marketing manager and educator. He has worked for such
companies as Western Electric Corporation, Aetna Life and Casualty, Bell
Laboratories, Digital Equipment Corporation, VA Linux Systems and SGI.
He is now an independent consultant in Free and Open Source Software
(FOSS) Business and Technical issues.